Before Southern California was a sprawling megalopolis of 20 million people it was one of the largest fossil fuel basins in the world, and with global oil prices approaching $150/bbl, the region’s lightly drilled or previously abandoned fields are being eyed for a lot of new drilling activity. This prospect has stirred concerns among many residential communities that surround still-producing fields in parts of southeast and west Los Angeles County, Long Beach and the Ventura area northwest of the city of Los Angeles.

Texas-based Plains Exploration & Production Co. (PXP), which produces about 9,000 boe of oil and natural gas from an 84-year-old field in southwest Los Angeles, has proposed adding more than 50 new wells annually to its 1,000-acre properties that are surrounded by high-priced residential areas in adjoining hills sitting halfway between Hollywood to the north and Los Angeles International Airport to the south.

Thirty miles east in the Whittier Hills between Los Angeles and Orange counties, the city of Whittier is considering resuming drilling on 1,200 acres of former Chevron and Union Oil production fields — still producing — that the city purchased from the oil companies in the mid-1990s for conservation purposes. In Long Beach a once-world-class 21-square-mile oil play had 70 new wells drills last year and is expected to add the same number this year.

And in Ventura County the Venoco Inc. has increased production in the 65-well Montalvo field 20-30% in the last year to about 1,000 b/d, according to company officials quoted in a Los Angeles Times report last Friday on the growing interest in stepping up drilling around Southern California and the adverse reaction of local homeowners in some of the areas.

While the volumes — even with substantial new drilling — on a national basis would never be significant, the potential for increased local and regional profits is very real. Local entities, such as Whittier, are drawn to a potential additional source of city revenues in a time of extreme belt-tightening throughout California and other western states.

Citing needs to preserve open space and environmental protections, Whittier’s civic leaders have said they want to investigate “the potential for extraction of water, natural gas and oil from the sub-surface formations” in their surrounding hills, noting “recent technologies now permit the mining of these valuable assets without the damage and scarring of our property.” Whittier is talking to Australian-based Matrix Oil, which is the predominant exploration company still working in the area.

Along the coast Long Beach’s Wilmington field, discovered in 1932 and once the source of 7 billion barrels of heavy crude, is drawing interest from a number of companies, but officials say the amount of new drilling is constrained somewhat by a lack of qualified petroleum engineers and equipment. Long Beach’s city gas and oil department supervises oil production and subsidence control in the Wilmington field.

Since 2000 Occidental Petroleum Corp. has had production and drilling operations in Long Beach on a series of four man-made, heavily camouflaged islands on which more than 1,200 wells have been drilled over the years. Occidental operates its own 46 MW electric generation plant to help power THUMS, named for the original industry consortium partners that developed the offshore play (Texaco, Humble, Unocal, Mobil and Shell).

Denver-based Venoco said in its first quarter earnings report in May that $13.9 million, or 22%, of its capital expenditures occurred in Southern California during the quarter. The company said it was focused on returning wells to production and facility improvement in the West Montalvo field in Ventura County, along with upgrading existing offshore operations.

Although Venoco noted that production was down slightly in the first quarter in the region, “production in the West Montalvo field began to increase during the quarter as a result of improving fluid handling facilities and adding water injection wells to process fluids from returning idle wells to production and reworking existing wells.”

The LA Times report quoted operators from Ventura to Long Beach as confirming that the high global oil/gas prices have greatly improved the economics for reworking the old local fields, but it pointed out the growing potential conflict with nearby communities where residents already have seen their property values plummet from the subprime mortgage crisis. Local government officials will have to balance the need for added revenues with local nearby property owners’ concerns.

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